Episode 154: Being Rich: Top Problems You Want to Avoid When Becoming Wealthy

Mitch Stephen has been a self-employed RE investor for 20+ years. His real estate investing career started at the age of 23 when he read “Nothing Down” by Robert Allen.

REAL ESTATE INVESTOR: Mitch, together with his wife, Tommi, and his daughter, Shannon purchased their fair share of local houses. Their company, Independence Day, Inc., has bought and sold over 1,500 properties in and about San Antonio, Tx since 1996. This company specializes in buying distressed properties with OPM and the selling of those owner financed properties.

EDUCATOR:
Mitch offers Online Education, Group Coaching, and one-on-one Mentorships as it relates to all the aspects of Owner Financing and owner financed properties.

Mitch forged the creation of a mass texting software, LiveComm.com to help solve problems that arise when you get numerous calls from bandit signs and other advertising efforts to sell your houses.

The main reason Mitch wanted this system was to reduce the number of calls from potential buyers (that asked the same questions over and over) to a group of the most qualified buyers, saving time for the sales team. This solves that and much more to streamline your selling process.

Resources:

Transcript:

Mitch: This is Mitch. Welcome to the Real Estate Investor Summit podcast. I’m here by myself today, in what we call a solocast. I’m just going to talk to you about some thoughts that I’ve been having on a certain topic. And the topic is, The Problem With Being Rich. So if you think being wealthy is a piece of cake you might want to think again, because there are obstacles to overcome and decisions to make. And sometimes the more money you make, the bigger these decisions can be. And if you handle them wrong, you won’t being happy and wealthy. You might be wealthy, but you won’t be happy and wealthy. So stay tuned for a word from our sponsors, we’ll be right back and we’ll talk about the problem with being rich.

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Mitch: Okay, so it seems like an oxymoron, right? The Problem of Being Rich, like why would being rich cause a person a problem? Well, I think there’s cases all over the news, in the TV stations, in air airwaves and internet of people that have an abundance of money, hasn’t really served them well. Now, would have they been in demise if they didn’t have money? Who knows? Maybe they’re just destined to be in demise no matter what income or whatever they had. But it’s suffice to say that, wealth does bring some kind of larger, bigger temptations and options. And some of those options that you can have because you have money, are great options.

One of the first things I’d say is, if you can keep your wealth to yourself, it’ll serve you well. It’s a little hard … Actually it’s not a little hard, it’s very hard to not share that you’re successful with the people around you. And if you don’t share with them openly and outwardly in communication, then it’s too hard to hide sometimes, because they can just see. They see the new car you’re driving, they see the new house you bought and the neighborhood you live in, and they don’t have to be a rocket scientist to figure out that you have done well financially. The first thing that happens is family members and I hear this all the time, I hear it all the time, I see it all the time. I don’t really experience it very much myself, but I hear about it an awful lot.

Family members … First of all, a successful person tends to want to hire or put their family in their business. This is a really, really, really tenuous move. I like to call it a bad move but it’s a tenuous move. I understand maybe your wife or your spouse because they’re inherently involved in a business whether you like it or not, I mean they’ll legally own half of it most of the time. And so, that’s a natural. The only thing about making your spouse an integral part of your business is that, the whole point of this business is to become free and to be able to do what you want, when you want, with the people that you love. And it’s bad enough trying to figure out how to just get yourself on vacation for a month, much less yourself another integral part of your business that your spouse is handling. So be careful when you’re planning your business out in the future, that you don’t put so much of your family in important positions, that when it comes time to vacation, you all can’t go together. I’ve had that happen, and I’ve seen that happen with a lot of people.

The other thing is, dealing with family is very, very stressful in the fact that, it’s not like a hired employee. And what I like about hired employees is that, if they’re not doing a great job or we don’t see eye to eye, I just cut them loose. I let them go be their own person and find their way someplace else. When you start contemplating letting loose or even firing a family member, you’re talking about a whole different set of issues, and the emotions of the whole thing. How much you really love them, even though they’re not doing a great job can crowd your decisions on how to run your business. The businesses are black and white, they’re don’t know or nor do they care about your love for your daughter, or your son, or your wife. The business just needs someone to run it, and run it right. If it’s not being run right, the business doesn’t care, the business says, “This person has to go, and you need to get someone else that can do a better job.” And when you have a family member in that position, it’s very tough.

The other thing about family members and you being wealthy is they will come for loans. And this is really difficult because if you happen to be wealthy in business and those around you can see it or know it, it gets very difficult to deny someone a $2,000 loan, a $3,000 loan, a $5,000 loan. It’s like they look at you and say, “You have it, you have more than you need, why can’t you loan me some money?” And I just personally, have been able to avoid a lot of that by saying these exact words, “I don’t loan money, that’s not what I do and I never have done that. And I’m not going to start now.” And then personally inside if I decide to help them with their financial issue, then it’s just a gift. And I’m just going to give it to them and tell them, “No need to pay it back. I don’t want you to pay it back. Take this and do what [inaudible 00:07:10]. And then, I’m not going to do this again but instead of this being a loan, it’s a one time gift but I won’t do it again.”

And even that’s hard to tell someone you love. You know what I mean? So that’s the subject of family members. Then there’s vices. If you have vices, they just seem to expand when you have money. And a lot of people I know stay busy or don’t go into retirement when they’re real transparent with me and talk to me straight face to face, they’ll tell me, “You know a person with a lot of money and a lot of idle time, with still a lot of youth left in them, with a lot of energy left, can get into a lot of trouble.” They found that it was just better that if they stayed busy to do something instead of having all the idle time. A lot of people that retire get bored or die very shortly after that. Usually they just get so bored they can’t see straight because they dreamed about being able to play golf all day long, [inaudible 00:08:16] all week long, but their friends can’t go play golf all week long, they have jobs.

And so there you are by yourself playing golf. I suppose you could meet some other wealthy on the golf course and solve that issue but most people don’t … I don’t know, transition that well. They going to keep their same old friends, and if their same old friends can’t come then they probably we will just rather go back to work. And a lot of them do that. And they go back to work to keep their juices flowing and their mental savvy at top levels, and to avoid those vices. Like I said, a person with a lot of money, a lot of idle time, that still has a high energy level, or moderately high energy level, can find themselves in the wrong place pretty quick. And that has a lot to do with discipline. Your disciplines can shrink.

You may enjoy food and start to eat at the finest places and while he you can afford it, you can have whatever you want, you can have as much as you want, you look up one day and you’re 50 pounds overweight. That’s one that I struggle with. It’s like, “I can afford all this and I really want all this but no, I shouldn’t do all this.” And that’s how kings used in the gout. It’s because they had so much of the finest stuff and they sat idle in between meals that they started having gout and having health issues just because, there was too much of a good life. Not to mention smoking, or alcohol, or propensity for certain kinds of drugs. So those too can get out of hand, and falls in the vices and the discipline section. So be careful when you start to come into your own, to take in that don’t let yourself slip too far, because it can certainly happen. And if you’re not paying attention you can look up and, wow it’s a long road to try to lose 50 pounds. It’s just a long road.

Then there’s other little things. They’re not really big issues, they’re blessings of course, but they can become … There’s charities. I mean once you give to charities they’re going to call you every year. The charities that haven’t called you will start calling you because maybe you hit some kind of list that you have given to charities. I don’t know where that list is, but there seems to be one. Everyone in the world, when you give them something and it’s tied to your name, everyone in the world seems to get your name and now everyone’s asking you. Even if you just give privately and they know your name, they’re going to come back every year. So maybe it’s the best just to give anonymously and not put your name to it. And I guess maybe that’s really how we should do charity, it’s just anonymously.

Also, be careful of a growing overhead. Just like your weight could creep up on you because you can afford all these different lavish foods in restaurants and drinks, your overhead can creep up and up, and up as well. So be careful of your overhead. I am constantly looking for … When I increase my overhead in one area, I like to at least twice a year, call a meeting of everybody and go, “I want everyone to review everything I’m paying for monthly, and I need to figure out, what can I cut out or without, or what do I not need anymore.” So when I increase my overhead 500 bucks a month, I like to find someplace to go cut it. And surprisingly enough, a lot of times things that I have bought into that increased my overhead a year ago, are no longer relevant or I don’t care about them as much anymore or I can live without them.

And when I go to get in the something else that’s a $500 increase in my overhead, I need to call a … When I call that meeting and they go back and look around expenses, they go, “What about this? What about this? What about this? ‘Oh, that one right there, I don’t need that one right there. How much is that one?” That’s $487 a month. “Well, I don’t need that anymore. Yeah, cut that out. That’s a great savings right there. I won’t even miss that. I don’t even remember why I signed up for that. I didn’t use it but about a week.'” It’s like that gym membership, if you haven’t gone to the gym in six months, just cancel it and go back when you want to. If you really want to go back to gym, I’m sure they’ll let you reapply. And a little helpful hint, I like to call it, pent up demand.

If you’ve been without anything or if you’ve lived frugally your whole life and then you start to come into money or heaven forbid, you win the lottery, or you inherit a large sum of money. I’ve heard this from a lot of financial planners, that when that happens to someone, let’s say it’s a million dollars. They take 10% of it or 100 grand, and they give it to the family member or the family and say, “Look, here’s 100 grand. We want you to have a good time.” Take 10% of this money and go blow it. Go buy a jet-ski, go on vacation, go parasail, go get you … Do whatever you want to do. Blow through this 100 grand and we get it out of your system, because after this 100 grand is gone, we’re going to have to live with what this 900,000 … within the income of this 900,000. We’re going to live inside this budget.

But let’s get this pent up demand out of the way and let’s go blow some money and just do some stuff that you never dreamed. I mean, charter a private jet and take your extended family to camp through for the week on a private jet. Do all that kind of stuff and get it out of your system. And get to where, “Okay, done that, don’t need to do it again. It was great but … It cost extremely ridiculous amount of money and I don’t need to do it again, but I’m satisfied that I did it and my heart is full, my belly is full and everything’s full, I’m good.” And now it’s time to start living within this budget now. You lived your whole life without that $900,000 that you’re using to produce income, so just take whatever it is that it makes and learn to live off that.

I mean for heaven sakes, you didn’t have that $900,000 for your entire life until that day. And so why would you have to blow the $900,000? Why don’t you just increase your lifestyle by the amount of income that, that 900,000 can make you and not increase it so much that you’re biting into the principle of that 900,000. And so, that’s my dissertation for the day. I hope maybe struck I struck a cord with some folks out there. Maybe this is just all ridiculous. I will tell you this, it’s just my opinion. It’s just my point of view and there’s probably lots of other things to add to this or to subtract from it, but I just wanted to give you a chance to contemplate. If you’re on your way to being wealthy or if you’re already wealthy, you might want to stop and think about few things a little bit. And I hope it helps.

This is Mitch Stephen with the Real Estate Investor Summit podcast. Thank you for stopping by and listening to me. I appreciate each and every one of you. And if you really want to help me, please go give me a five star on iTunes, or you can go to Amazon and give my books a five star review because let’s face it, Mitch Stephen is not famous, nobody … A handful of people in the world know who I am and that’s it. I mean, the only reason anyone signs up for my product, or reads my books just because of five star reviews from people just like. And I can’t tell you how much I appreciate and how much they mean to me. Thank you so much. This is Mitch Stephen with the Real Estate Investor Summit podcast and we’re out of here.

Speaker 1: You’ve been listening to the owner financing master, Mitch “Be The Bank” Stephen, on the Real Estate Investor Summit podcast. Let us now blatantly, without apology drive you towards financial freedom, by offering you a whole bunch of free stuff. Go to reinvestorsummit.com and get you some. And you all come back now, you hear?